Will The Banks Actually Allow This?
It is being reported in the Telegraph, that the government is thinking about allowing peer-to-peer lenders to be funded by ISAs.
I suppose it will be very good news for those who invest in ISAs, but it will be bad news for banks, as they will be losing one of their ways of selling low-interest rubbish products to their customers. The only way, they could get a piece of the action, would be for a bank to get into bed with a peer-to-peer lender. But the likes of Zopa and their peers, probably have enough financial friends to set up a way to sell ISAs and give the banks even more of a kicking.
After all, how many of those on the Dalston omnibus would trust a banker with anything but small change.
I suspect George Osborn is going to get an enormous amount of lobbying to stop this well-thought out scheme.
Hold tight George! Our savings are dependent on you not giving in to the wunch,
An Unseen Advantage Of Peer-To-Peer Lenders
There are three main peer-to-peer lenders in the UK; Funding Circle, Ratesetter and Zopa and I have extensive filters and Google alerts that look for any fraudulent activity concerning these companies.
Have I just not found them, but I haven’t seen or heard of anybody trying to get access to any of their web-sites for illegal purposes. I’ve not even heard of anybody trying to hack Wonga either.
On the other hand I’ve had over thirty phishing attempts in the last few weeks to try to get into my non-existent Barclays account.
So are you at an advantage if you keep your savings with a peer-to-peer lender?
Certainly at present you are! But phishing attempts will come, even though I think they would be a very difficult scam to setup and target successfully.
Another Reason To Go Peer-To-Peer
The Times is reporting today that the Prudential Regulation Authority is going to compel banks to raise another £120 billion in equity over the next few years. Most of this will probably be raised from a whole collection of unsavoury characters ranging from Russian oligarchs to Arab sheikhs, whose biggest things in common other than the money, are being lucky in the first place and a general disregard for human rights and the real people of this world.
In five or so years tine, I wouldn’t bet on any major bank being UK-owned.
So peer-to-peer lending is starting to look even more attractive, as those behind their money, are the general populace of the Internet. My only worry is that the Prudential Regulation Authority, tries to impose its excessive rules on peer-to-peer lenders.
What we also need now, is a company or organisation, that handles all of the payment functions of a bank.
Is Funding Circle Going To Sleep With The Enemy?
There are rumours around the Internet that Funding Circle is going to tie up with Santander. Read a report here in The Telegraph.
For many years ING provided funding to a host of smaller lenders in the UK. Then they changed tack and left these lenders up the creek without a boat, let alone a paddle.
The only possible tie-up that I would possibly do if I was the CEO of Funding Circle is to licence the technology for use in a non-competing market.
I certainly wouldn’t get involved in any direct tie-up in the UK, for a number of reasons. Most of these are detailed in the Telegraph.
But I was part of a small dynamic company taken over by a big US corporation and it just didn’t work. Santander and Funding Circle are so different, I’d only give them a few months before they fell out in a big way.
I hope that if they are talking, that Funding Circle see the light and withdraw.
But the rumours probably haven’t done their business a load of good.
Does Danny Alexander Read My Blog?
Last week I published this post. The key part is this paragraph.
I would like to see a law, where all loan companies from the banks, through peer-to-peer lenders to the legal loan sharks, have to publish the amount of money they lend in various parts of the country.
Today I read this article on the BBC web site. Here’s the first paragraph.
Major UK banks will reveal details from January of their lending in thousands of local areas, Chief Secretary to the Treasury Danny Alexander has announced.
So did he read what I said?
Remember many years ago I used to analyse the costs in the various branches of what was then a major clearing bank. It was amazing the differences you got between branches causes by the odd mistake, malpractice or unforeseen circumstance.
Cissé’s Stand On Wonga
Papiss Cissé is adamant he won’t wear a Wonga-branded shirt, as reported here in the Guardian.
I support his stand.
I would like to see a law, where all loan companies from the banks, through peer-to-peer lenders to the legal loan sharks, have to publish the amount of money they lend in various parts of the country.
That way we could see if shirt sponsorship was a good idea for lenders.
What Do You Get When You Cross Zopa With Wonga?
At a first glance Zopa and Wonga are at the two ends of the financial spectrum, when it comes to borrowing and lending money.
Zopa, Funding Circle and Ratesetter, and probably a few other peer-to-peer lenders in the UK and around the rest of the world, take in money from those who want a bit more interest on their savings and lend it out to those who after a series of rigorous checks, look like they might be able to repay it.
I have seen figures which show that peer-to-peer lending grew by 300% in the last year and has now lent over half a billion pounds. So they must be doing something right! On a personal note, although my return has dropped a bit in the last year, I still get nearly five percent on my money invested in Zopa before tax, after taking into account all charges and bad debts.
Wonga and the other payday lenders probably lend a lot of their money to people who’d never qualify for a loan from Zopa and their peers. The interest rates are a lot higher and the terms are generally not as favourable as those offered by Zopa.
In some ways what unites Wonga and Zopa is their efficient systems, backed by state-of-the-art computing. Robert Peston talked about Wonga’s systems in this article.
eMoneyUnion is a new peer-to-peer lender, which could be thought as a company, that takes the best practice of Zopa and Wonga and combines them to create a company that can lend to those who wouldn’t get a Zopa loan, but also gives a good return to its investors. This article is about the launch of the company.
So it would appear that eMoneyUnion could be the cross between Zopa and Wonga!
Let’s hope it all works out well. I shall be investing.
Zopa Is The Kwikfit Of Banking
This article on Wired.com reports a speech made by Zopa CEO; Giles Andrews. He starts in combative form.
The banking industry has “forgotten who its customers are”
They would have lost most of them, if people thought hard about their banking.
Giles then says this.
But the banking industry has left itself vulnerable, he says. He compared the need for consumer-focussed disruption in banking to the transformation of the car services industry 40 years ago. KwikFit made car repair faster, more convenient and cheaper. “They provided a product that was better value, offered better convenience and a better customer experience. It was just a better product.”
Zopa is truly the Kwikfit of banking. I just wish I’d started to use them earlier.
Banks Don’t Do Parties
It’s many years, since I had any hospitality courtesy of my bank. It was probably a meal from David, when we were getting each other out of various scrapes.
But last night, one of the peer-to-peer lenders I use, invited me to a party.
One important thing was said, which addresses one of the problems of the peer-to-peer lending market and that was that the major peer-to-peer lenders had asked the government to legislate and bring them under the wing of the Financial Conduct Authority. It will probably happen in the spring of next year, but as with most government legislation, who knows? How many organisations or groups of companies have actually asked to be regulated? I can’t think of one, even outside of the financial area.
There was also a feeling at the party, that the various high-profile payday and short-term lenders cause confusion in consumers’ minds and this didn’t help. Let’s face it, judging by the number of bus and television adverts for these higher cost lenders, the public might even think that peer-to-peer lending didn’t exist or was a very niche product
It would be interesting to know, how many possible borrowers, never check that they might get a better deal from a peer-to-peer lender than their current bank, simply because they don’t know of peer-to-peer lending or don’t know how to contact the lenders? For instance, it would also be interesting to know such things, as how many people with excellent credit ratings, who regularly borrow money, don’t use the Internet!
If I ran a peer-to-peer lender, I’d get someone like YouGov to do a survey! After all, the party last night was a convention of believers, so anything obtained there would be statistically skewed.
The party was also a great place to exchange ideas and investigate how your money was handled. When did your bank last explain to you personally, why they were giving you such a poor rate on your Deposit Account? No one, probably gets decent service out of their bank these days, until they pop their clogs, as only then will the bank lose the easy money they make from that customer.
In this article, the banks are accused of being less than co-operative with the peer-to-peer lender; Funding Circle.
Who’d have thought that those respectable banks, would do something like that?
The Anonymous Widower 